The housing market needs further clearing...it's flooded and prices are still "too damn high."

I do like that household debt is declining (marginally). This has more to do with hard-learned lessons of the recent past and better personal finance decisions at the individual and family levels. I do not argue that lower household debt is genuinely healthy for the economy but I do not foresee any booms being spurred from it. Plus if housing construction continues to "rebound" the financing must come from somewhere. More than likely this will mean more household debt.

The term Economic "boom" itself does not denote healthy and sustainable growth in the economy. Rather it describes one half of the business cycle, which is an all around detrimental creation.

"The new boom will be driven by three things: A rebound in housing construction, the rise in domestic energy production, and the end of consumer debt deleveraging."

OMISSION: Artificial Scarcity from REO inventory held off the market to artificially boosting prices

As many as 90 percent of REOs are withheld from sale, according to estimates recently provided to AOL Real Estate by two analytics firms. It's a testament to lenders' fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.Source

Earnings reports from JPMorgan Chase and Wells Fargo have highlighted the improving housing market, and this has boosted their stock price.

And there are growing indications that this is all based on a convenient fiction around artificially reduced supply. A little-noticed item at AOL Real Estate, based on the same industry data banks and analysts use to tout a recovery, introduce us to the scam in “shadow REO”...

One of the main reasons for the alleged recovery in housing prices comes from this constraint on supply. With fewer and fewer homes on the market, the bidding for what’s left available goes higher. Prices rise and distressed sales fall (because the distressed sales are kept off the market). There are other factors, but shadow REO of up to 85-90% is a huge one that doesn’t play into most analyses.

We appear to have banks keeping inventory off the market deliberately to gouge prices upward and give the impression of recovery. And so far it’s actually working.

And why wouldn't banks do this? They're being paid by the Fed to park their reserves, and have all the stay power in the world, and no incentive to do anything but sit on it all in an attempt to create, inflate, and milk, a new artificial bubble. The falling prices that would normally have come about naturally, and would have created real opportunities and incentives for millions, is being artificially propped up--to keep the bubble illusions, including all ARTIFICIAL WEALTH, alive.

MEANWHILE -- San Bernadino County has those who are enriched by Shadow REO scam very worried. Developers love eminent domain when it forces a cheap sale price onto one of its many victims, and all for the purpose of increasing real estate values through development. They justify this to the state by all the "economic activity" (and increase revenues to the state) that will result. They're not so keen on the idea of eminent domain, however, when their own real estate is targeted for that very same reason.

San Bernardino County has created a joint powers authority to explore a proposal to hire a private venture to wrest privately-held mortgages out of investment pools, so homeowners who owe more on their property than it’s worth can refinance or modify their loans.
....
“If they do this, there’d be a $35 million gain” for the San Bernardino County Joint Powers Authority, Herrera said, commenting: “It’s the first time that we’ve heard that the government agency, partnering with Mortgage Resolution Partners, would receive a financial benefit.”
....
Inland economist John Husing said he believes the concept needs to be vetted.

He’s intrigued by the ferocity of the attack from lenders on Wall Street over a strategy based on lowering the loan-to-value ratio on the mortgages. “It makes me wonder if they really want to see the numbers come down,” Husing said.

Dorfman on Wednesday warned that a government-led takeover would trigger a backlash from investors around the world who have bought trillions of dollars worth of privately-backed mortgages.

“The losers are tens of millions of American families and workers who deposit money in local banks or global banks, who have 401(k)’s in retirement plans or are saving for a down payment to acquire homes,” he said.

Note that last incredibly disingenuous quote. Mortgage values adjust to deflated property values, which allows over-valued real estate to finally adjust, and somehow that gets equated to a loss of SAVINGS(?!) for bank depositors? And a correction in real estate values is supposed to adversely affect those who are saving for a home HOW, exactly?

And why wouldn't banks do this? They're being paid by the Fed to park their reserves, and have all the stay power in the world, and no incentive to do anything but sit on it all in an attempt to create, inflate, and milk, a new artificial bubble. The falling prices that would normally have come about naturally, and would have created real opportunities

They get one quarter of one percent to leave money parked with the Federal Reserve. If they issue a mortgage they can get over three percent. Which would be a better return and incentive for what to do with their money?

I can't tell you how often I hear that retort... like I wrote the other day I think we're never going to see a boom like the 90s ever again. They're going to have to reform the currency before we get there...

These thoughts and false indicators have been adequately refuted each time. I appreciate the alternative perspective and time it took to present but now is not the time to be cheer-leading for the status quo.

How do you see housing construction rebound ? Banks will not be lending anymore in the next few years than they have in the last few, I imagine . Unemployment should start rising in Jan. .......

Housing starts bottomed at an annualized rate of 500k in 2009. Now we're at 872k. Banks are a little tougher with credit scores, but they're making up for the total volume changes in loans to investors. The spread between cap rates and mortgage rates is unreal; it'll be arbitraged away for the next few years, driving up prices and boosting demand.

Originally Posted by Steven Douglas

OMISSION: Artificial Scarcity from REO inventory held off the market to artificially boosting prices

And why wouldn't banks do this? They're being paid by the Fed to park their reserves, and have all the stay power in the world, and no incentive to do anything but sit on it all in an attempt to create, inflate, and milk, a new artificial bubble. The falling prices that would normally have come about naturally, and would have created real opportunities and incentives for millions, is being artificially propped up--to keep the bubble illusions, including all ARTIFICIAL WEALTH, alive.

Have you considered that the real estate bubble was worse in some places than it was in others? That maybe many of the "shadow inventory" is in places like Detroit, Las Vegas, etc. - markets that got decimated by the housing collapse? Your attempt to make a conspiracy of a bank's rational decision-making is crazy.

Think this through: a few highly populated cities were outliers in the correction. These cities are overrepresented in a bank's portfolio of foreclosed homes. No bank or a combination of banks is going to put up 20% of all home inventory in Detroit back on the market tomorrow. That's nuts.

Shadow inventory is not spread evenly all around the country, otherwise you might have a case. Obviously the most shadow inventory is in only a few metro areas and those areas are doing poorly so banks are holding back some of their inventory. They are not representative of the whole United States, however. Whether or not we have a surplus of homes in Detroit really isn't important to the real estate market in Nashville.

These thoughts and false indicators have been adequately refuted each time. I appreciate the alternative perspective and time it took to present but now is not the time to be cheer-leading for the status quo.

You have a very low threshold for "adequately refuted." This post merely reflects on the fact I'm not the only one to see three very big bright spots for the American economy going forward.

Have you considered that the real estate bubble was worse in some places than it was in others? That maybe many of the "shadow inventory" is in places like Detroit, Las Vegas, etc. - markets that got decimated by the housing collapse? Your attempt to make a conspiracy of a bank's rational decision-making is crazy."

Wow. When you say "decimated" you're thinking in terms of greatest market value drops, not number of FORECLOSURES, which is the operative word. With just a little critical thinking, we can see that the entire economy, and not just the real estate market or prices, was hit hard by the housing crash. It wasn't just falling market values of real estate and upside down underwater mortgages by speculative house-flippers that caused many to go into foreclosure.

If anything, the banks DO NOT want to mess with anything with negative equity. They would prefer NOT to foreclose on anything that is underwater, or on anyone who is upside down. Which leaves banks with a mad scramble foreclose on anything with positive equity, so that they can STEAL the difference. Hence, foreclosure robo-signing, as anyone with positive equity is TARGETED. That's not conspiracy theory, it's well documented, and I have two family members going through that right now -- doing everything they can to hold onto their assets (and their asses) as the banks to everything they can to make it impossible to even pay their mortgages, so that they can be in technical default and have their homes ripped out from under them.

Meanwhile, unemployment, and predatory loans with variable rates are just a few other factors involved in all of this, and in all geographical areas--not just those that took the largest market value correction hits.

It's the nature of the business, and the artificially distorted market, with no conspiracy theory needed or believed in. Do you not even understand the law of supply and demand as it relates to price? With just a little more critical thought applied, and the most basic economics, we can also see that housing prices, even in the so-called outlier areas, are directly affected by the quantity that is placed on the market for sale at any given time, and that prices would drop in all areas, with virtually no exceptions, if all shadow inventory was released.

That's not conspiracy theory, it's well documented, and I have two family members going through that right now -- doing everything they can to hold onto their assets (and their asses) as the banks to everything they can to make it impossible to even pay their mortgages, so that they can be in technical default and have their homes ripped out from under them.

Please prove this. Sounds like you're delivering half the story or completely lying, which makes it difficult to even have a conversation with you.

Why aren't we hearing about this in large scale? Seriously? 20% down and boom! Scam the borrower.

You completely ignored my point that withholding homes does keep prices higher, but banks are not holding onto properties in markets that are doing fine. Hence, I'm not surprised the most homes are being held in areas where the housing market is doing poorly. No one is building in areas where the market is performing poorly. Builders are building like crazy in good markets - markets where there is little to no overhang from shadow inventory.

Please prove this. Sounds like you're delivering half the story or completely lying.

What an absolutely inane request. The fact that you even consider what I wrote impossible, let alone improbable or anecdotal, is absolute proof that you are completely out of touch with reality, and what has been going on in the mortgage finance market since 2008. Do you even pay attention to the MSM? Because for as shitty as they are, they caught it, and they report it regularly.

There's no personal "proof" being offered to you for reasons that any reasonable and prudent (read=sane) person would completely understand. Aside from that, the stories are too long, convoluted and sordid for me to even care to explain to anyone, let alone open up to someone who pretends to be completely unaware of current events. Speaking of which, since you obviously have an internet connection that reaches into this internet from an alternate universe, and I assume Google is blocked from where you are, let me give you a teensy glimpse of what is happening on this particular Earth, in this particular dimension:

What an absolutely inane request. The fact that you even consider what I wrote impossible, let alone improbable or anecdotal, is absolute proof that you are completely out of touch with reality, and what has been going on in the mortgage finance market since 2008. Do you even pay attention to the MSM? Because for as shitty as they are, they caught it, and they report it regularly.

There's no personal "proof" being offered to you for reasons that any reasonable and prudent (read=sane) person would completely understand. Aside from that, the stories are too long, convoluted and sordid for me to even care to explain to anyone, let alone open up to someone who pretends to be completely unaware of current events. Speaking of which, since you obviously have an internet connection that reaches into this internet from an alternate universe, and I assume Google is blocked from where you are, let me give you a teensy glimpse of what is happening on this particular Earth, in this particular dimension:

None of these talk about homeowners having their equity stolen by banks as you allege. You made a ridiculous and perhaps untruthful claim. Don't be upset with me for calling you out on it.

Earth to Jordan, you calling me out on anything at all is not upsetting. It is as meaningless as your rosy claims for the economy.

If a bank forecloses on a mortgage where the owner has positive equity, and puts a house up for quick sale, it is not an ordinary market sale-by-owner, and never for "fair market value". It is only for the amount sufficient to satisfy the outstanding balance of the mortgage. It is not that the bank keeps the stolen/owner-defrauded equity for itself. It cannot, and that is not required for a theft to have occurred (I can rob your blind and throw your shit away and it will still be a theft). Rather, it uses that owner's equity to sweeten the deal, as a savings offered to some future owner at the previous owner's defrauded expense. That's how equity is stolen by banks, and there is no "allege" to it, as it happens routinely.

Earth to Jordan, you calling me out on anything at all is not upsetting. It is as meaningless as your rosy claims for the economy.

If a bank forecloses on a mortgage where the owner has positive equity, and puts a house up for quick sale, it is not an ordinary market sale-by-owner, and never for "fair market value". It is only for the amount sufficient to satisfy the outstanding balance of the mortgage. It is not that the bank keeps the stolen/owner-defrauded equity for itself. It cannot, and that is not required for a theft to have occurred (I can rob your blind and throw your shit away and it will still be a theft). Rather, it uses that owner's equity to sweeten the deal, as a savings offered to some future owner at the previous owner's defrauded expense. That's how equity is stolen by banks, and there is no "allege" to it, as it happens routinely.

So routinely that you can't find any instance and instead link me to a bunch of unrelated news items?

You made it sound as though it's as easy as the bank taking the home. You should be more honest and tell people that the home is in the process of foreclosure because whoever owns the house hasn't been making payments as agreed.

You should be more honest and tell people that the home is in the process of foreclosure because whoever owns the house hasn't been making payments as agreed.

Now I'm thinking you are honestly and genuinely obtuse on this matter, and not just pretending to be stupid for the sake of trolling. I am now beginning to think that you really do believe that all foreclosures are simply the result of non-payment. Why don't you admit that you didn't really read (or comprehend, if you did) what I cited? And why was I not upset at all when I thought you were simply trolling for the sake of trolling, but now angry with you for what appears to be nothing more than blithering ignorance? I'll have to work on that.

One of the many unfair actions taking place in the mortgage industry is that of starting a foreclosure while the California homeowner is trying to get a loan modification. This new Act will require lenders to look at a modification request and communicate an acceptance or decline, as well as the reasoning behind it, before a foreclosure can start. This gives California homeowners the opportunity to try and save their homes from foreclosure.

Another important provision of the Homeowners Bill of Rights is the Due Process Rights Act, which forces lenders to provide one point of contact for homeowners seeking loan modification. Often when homeowners are trying to get a modification, they get bounced around from person to person, get told opposing things, and never receive a final answer to their application. Meanwhile, their house goes into foreclosure. The Due Process Rights Act will make it simply for homeowners to submit loan modification applications and get answers.

A variation on the above-stated abuses was a problem for each of my siblings--neither of whom were in arrears at any time. Not by their actions, or for lack of funds or want of trying, anyway. For one sibling, a loan modification was applied for through Wells Fargo. Again, there were no payments in arrears, she was just looking for the bank to work with her on more favorable terms. Wells Fargo gave my sibling a point of contact, but would not accept any mortgage payments. Everything had to go through her point of contact, and no provision for receiving any further payments was made, even as her point of contact became unresponsive to all contact attempts. All calls went to voicemail, no messages returned, no payments accepted. Attempts and email and regular mail, both to corporate and her point of contact were completely ignored. Three times a cashier's check for the full outstanding amount was sent by registered mail and promptly returned to her, with a statement that gave her nothing but a runaround -- mainly centering around her point of contact, and how everything had to go through her.

It was not until the foreclosure process had advanced to the point where a sale date was established that my sister learned that her point of contact was no longer even in that position, and had not been for four months. The point of contact was still with Wells Fargo, but in a different division. My sister was never informed of that. The only messages she received from Wells Fargo were ones that threatened foreclosure if she didn't comply WITH WELLS FARGO'S INTENTIONAL CATCH-22. My sister existed on the unilateral foreclosure side only. On the payment side she was treated like a ghost that didn't exist--and all so that a fraudulent foreclosure could happen on a very expensive house with more than $300,000 equity at current market prices in her area.

My other sibling's story is a bit different, and with BofA, but very similar in terms of runaround.

As for any further proof or explanations, do a 360 swivel and check inside your butt. If you do manage to pull your head out at some point, don't forget to listen for The Coming Boom.

Earth to Jordan, you calling me out on anything at all is not upsetting. It is as meaningless as your rosy claims for the economy.

If a bank forecloses on a mortgage where the owner has positive equity, and puts a house up for quick sale, it is not an ordinary market sale-by-owner, and never for "fair market value". It is only for the amount sufficient to satisfy the outstanding balance of the mortgage. It is not that the bank keeps the stolen/owner-defrauded equity for itself. It cannot, and that is not required for a theft to have occurred (I can rob your blind and throw your shit away and it will still be a theft). Rather, it uses that owner's equity to sweeten the deal, as a savings offered to some future owner at the previous owner's defrauded expense. That's how equity is stolen by banks, and there is no "allege" to it, as it happens routinely.

We just bought a foreclosure after months of looking, and the houses were absolutely priced at market value, as opposed to the amount of outstanding mortgage debt. (It's all public record.)

We met the people who owned the house we bought. They went for almost 3 years without making a payment, and the bank agreed to modify their loan, but they would have had to come up with $3500. They hadn't saved any of the cash they were not spending on the mortgage, so they lost it anyway.

.

"Every great new thought was opposed. Every great new invention was denounced. The first motor was considered foolish. The airplane was considered impossible. The power loom was considered vicious. Anesthesia was considered sinful. But the men of unborrowed vision went ahead. They fought, they suffered and they paid. But they won."

We just bought a foreclosure after months of looking, and the houses were absolutely priced at market value, as opposed to the amount of outstanding mortgage debt. (It's all public record.)

We met the people who owned the house we bought. They went for almost 3 years without making a payment, and the bank agreed to modify their loan, but they would have had to come up with $3500. They hadn't saved any of the cash they were not spending on the mortgage, so they lost it anyway.

I'm looking at one similar to that now. In the normal foreclosure market. In one of our family member's cases, the pending "sale" (in Northern California) wasn't a normal market foreclosure OR sale. It was a fraudulent non-judicial foreclosure, and that is part of the lawsuit that is being initiated against WF. I don't have all the details, but what it boiled down to was the bank assigning a 'third party' receiver for the house, in a transaction that would end up with the bank owning the house anyway after all was said and done.

The fact that this is even surprising to anyone is completely surprising to me, so I will be getting the details - at least in synopsis form - and posting them here.